US stocks hit by Fed taper talk; S&P's loss streak longest in 8 weeks

CNBC's Bob Pisani looks at the day's market action including the release of the Fed minutes and weakened high-beta names.

U.S. stocks fell and Treasury yields jumped on Wednesday, with the S&P 500 extending losses into a third day, after Federal Reserve minutes showed central bankers generally expect economic conditions would support tapering central bank asset purchases in coming months.

Fed officials anticipate that economic reports would "prove consistent with the committee's outlook for ongoing improvement in labor market conditions and would thus warrant trimming the pact of purchases in coming months," according to the minutes from the Federal Open Market Committee's Oct. 29-30 meeting.

"The market is still expecting a taper next year, not in December of this year," said Dean Junkans, chief investment officer at Wells Fargo Private Bank. "I don't think we got much additional information. They talked a lot about their communication strategy; I think that's appropriate," added Junkans, referring to the market's surprise when the Fed opted not to begin curbing its $85 billion in monthly asset purchases in September.

"Unless we see big upside in the November payroll report, Yellen will take the reins in January with current policy on track and she'll decide where to go from there," offered Peter Boockvar, chief market analyst at the Lindsey Group, emailed.

Regardless, "the U.S. Treasury market is tapering before our eyes... and that should be the focus of equity investors," added Boockvar of 10-year Treasury yields, used to determine mortgage rates and other consumer loans, which climbed 9 basis points to 2.8 percent.

After climbing above 16,000, the Dow Jones Industrial Average fell 66.21 points, or 0.4 percent, to 15,900.82, with Boeing leading blue-chip losses after Oppenheimer downgraded the plane maker's shares to perform from outperform.

The S&P 500 declined 6.5 points, or 0.4 percent, to 1,781.37, with utilities pacing the drop and health care the sole rising sector of its 10 industry groups.

For every share gaining, two fell on the New York Stock Exchange, where 622 million shares traded. Composite volume topped 3.1 billion.

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On the New York Mercantile Exchange, gold futures for December delivery lost $15.50, or 1.2 percent, to $1,258.00 an ounce. Crude futures for January delivery dropped four cents to close at $93.85 a barrel.

Separate data from the labor Department showed the cost of living fell 0.1 percent last month, illustrating less costly fuel, cars and clothing. The core consumer-price index, which excludes food and energy, climbed 0.1 percent.

"The news flow on balance, whether economic data or corporate data, is better than expected; there were a lot of reasons to believe the government shutdown might have impacted the consumer, instead lower energy prices did," said Art Hogan, market strategist at Lazard Capital Markets, referring to the increase in retail sales that coincided with lower energy costs.

Wednesday's economic data showed inflation remained tame, with the October report seen as giving the Federal Reserve room to continue its monthly asset purchases.Another report, this one from the National Association of Realtors, had home resales down 3.2 percent in October.

The housing sector is "taking some of its cues from the 10-year," said Hogan of the benchmark Treasury note, yields of which are used to figure consumer loans including mortgage rates.

"October is not an important month for home sales; people just don't move in the fourth quarter, typically," Hogan added.

Third-quarter numbers from J.C. Penney had the struggling retailer reporting bottom and top-line misses, but positive comments on the company's turnaround had shares rising.